SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act
of 1934
(Amendment No. )
Filed by the Registrant [X]
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Check the appropriate box:
[ ] Preliminary Proxy Statement [_] Confidential, for Use of the
Commission only (as Permitted
by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[X] Definitive Additional Materials
[_] Soliciting Material Pursuant to 240.14a-12
USAA Investment Trust
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[ ] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
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14a-6(i)(3).
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and 0-11.
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computed pursuant to Exchange Act Rule 0-11 (Set forth
the amount on which the filing fee is calculated and
state how it was determined):
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[_] Check box if any part of the fee is offset as provided by Exchange Act
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USAA Letterhead
August 23, 1995
Dear Shareholder:
On October 13, 1995, a special meeting of shareholders of certain of
the USAA Family of Funds will be held to vote on several important
proposals. The enclosed materials contain information about the proposals
and a proxy to vote your shares at the meeting.
Your vote is extremely important, no matter how many shares you own.
We encourage you to complete and return the enclosed proxy as soon as
possible to ensure that you are represented at the meeting.
Among the items to be considered at the meeting are proposals to
approve changes to certain Funds' investment restrictions. These technical
changes do not affect the investment objective of any Fund and are not
expected to result in any significant changes to any Fund's investment
strategy. Moreover, these changes are consistent with regulatory requirements
applicable to the Funds and are in line with industry practice.
We believe they will modify investment limits of the Funds in a
way that recognizes the current state of the securities markets without
compromising the protections which the limitations give shareholders. The
Boards of the USAA Family of Funds believe that approval of each proposal
is in the best interest of the Funds and shareholders and unanimously
recommend that shareholders vote FOR approval of each proposal.
Voting by mail is quick and easy. Everything you need is enclosed.
To cast your vote, simply complete the enclosed proxy card. Be sure to
sign the card before mailing it in the postage-paid envelope provided.
If you have any questions before you vote, please call us toll free at
1-800-531-8448 . We'll be glad to help you get your vote in quickly.
Thank you for your participation in this important initiative for the Funds.
Sincerely,
Michael J.C. Roth, C.F.A.
President
USAA INVESTMENT TRUST
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
BALANCED PORTFOLIO FUND, CORNERSTONE FUND,
EMERGING MARKETS FUND, GOLD FUND, INTERNATIONAL FUND,
WORLD GROWTH FUND, GNMA TRUST AND
TREASURY MONEY MARKET TRUST
To Be Held October 13, 1995
To the Shareholders:
Notice is hereby given that a Special Meeting of Shareholders (the
"Meeting") of the Balanced Portfolio Fund, Cornerstone Fund, Emerging
Markets Fund, Gold Fund, International Fund, World Growth Fund, GNMA Trust
and Treasury Money Market Trust series of USAA Investment Trust, a
Massachusetts business trust (the "Trust"), will be held in the Auditorium
of the McDermott Building, 9800 Fredericksburg Road, San Antonio, Texas, on
Friday, October 13, 1995, at 2:00 p.m., local time, for the following
purposes:
1 . To elect a Board of Trustees;
2. To approve the proposals set forth in the attached proxy
statement to amend certain investment restrictions of the
Balanced Portfolio Fund, Cornerstone Fund, Gold Fund,
International Fund, World Growth Fund, GNMA Trust and Treasury
Money Market Trust; and
3. To ratify the selection of KPMG Peat Marwick LLP as auditors for
the Trust.
Shareholders may also consider and act upon any other matters which
may properly come before the Meeting or any adjournments thereof. The
foregoing proposals are described in greater detail in the attached proxy
statement.
The close of business on August 17, 1995 has been fixed as the record
date for the determination of shareholders entitled to notice of and vote
at the Meeting and any adjournments thereof.
By Order of the Board of Trustees
MICHAEL D. WAGNER, Secretary
August 23, 1995
YOUR VOTE IS IMPORTANT
NO MATTER HOW MANY SHARES YOU OWN
If you do not expect to attend the Meeting in person please indicate
your voting instructions on the enclosed proxy card. Date, sign and return
the proxy card in the enclosed envelope which needs no postage if mailed in
the United States. In order to avoid the additional expense of further
solicitation, please mail your proxy promptly.
USAA INVESTMENT TRUST
9800 Fredericksburg Road
San Antonio, Texas 78288
P R O X Y S T A T E M E N T
Special Meeting of Shareholders of the Balanced Portfolio
Fund, Cornerstone Fund, Emerging Markets Fund, Gold Fund,
International Fund, World Growth Fund, GNMA Trust and
Treasury Money Market Trust
October 13, 1995
This proxy statement is being distributed by the Board of Trustees of
USAA Investment Trust (the "Trust") to solicit proxies from shareholders of
the Balanced Portfolio Fund, Cornerstone Fund, Emerging Markets Fund, Gold
Fund, International Fund, World Growth Fund, GNMA Trust and Treasury Money
Market Trust (each a "Fund" and collectively the "Funds") series of the
Trust for use at a Special Meeting of Shareholders (the "Meeting") and any
adjournments thereof. The Meeting is scheduled to be held at the McDermott
Building, 9800 Fredericksburg Road, San Antonio, Texas on October 13, 1995
at 2:00 p.m.
Any person giving a proxy may revoke it at any time prior to its use.
A shareholder may revoke a proxy by appearing at the Meeting and voting in
person, by giving written notice of revocation to the Board of Trustees or
by returning a later dated proxy. Signed proxies received by the Board of
Trustees in time for voting and not so revoked will be voted in accordance
with the instructions noted thereon. If no instructions are given, the
enclosed proxy will be voted FOR the election of the nominees named herein
as Trustees and FOR each of the proposals described in this proxy
statement.
Shareholders of record of each Fund on August 17, 1995 are entitled to
notice of and to vote at the Meeting. Each Fund is a separate portfolio of
the Trust represented by a separate series of shares of beneficial
interest, no par value per share, of the Trust. As of the record date,
there were 10,440,615 shares of the Balanced Portfolio Fund, 38,895,746
shares of the Cornerstone Fund, 2,506,783 shares of the Emerging Markets Fund,
17,063,284 shares of the Gold Fund, 21,558,695 shares of the International
Fund, 15,847,206 shares of the World Growth Fund, 27,000,833 shares of the GNMA
Trust and 71,026,526 shares of the Treasury Money Market Trust issued and
outstanding, with each shareholder entitled to the same number of votes as the
number of shares of capital stock held by such shareholder.
The approval of shareholders of the Balanced Portfolio Fund,
Cornerstone Fund, Gold Fund, International Fund, World Growth Fund, the
GNMA Trust and Treasury Money Market Trust is required for each of the
proposals described in this proxy statement. The approval of shareholders
of the Emerging Markets Fund is required solely for Proposals 1 and 3. The
table below identifies which proposals are applicable to shareholders of
each Fund.
Balanced Portfolio Fund
Cornerstone Fund
Gold Fund
International Fund
World Growth Fund
GNMA Trust
Proposal Treasury Money Market Trust Emerging Markets
Fund
1. Election of
Trustees X X
2. Amendment of
Investment Restrictions
A. Diversification X
B. Borrowing X
C. Lending X
3. Ratification of Auditors X X
The Board of Trustees expects to make this solicitation primarily by
mail; however, in addition to the solicitation of proxies by mail the
officers and Trustees of the Trust and persons affiliated with USAA
Investment Management Company, the investment manager and underwriter for
the Funds, 9800 Fredericksburg Road, San Antonio, Texas 78288 (the
"Manager"), may, without remuneration, solicit proxies personally or by
telephone, telegram or other electronic means. The Trust also may retain a
proxy solicitation firm to assist in soliciting proxies. The costs of
retaining such a firm would depend upon the amount and type of services
rendered. The Trust does not anticipate that it will retain such a firm in
connection with the proxy solicitation for the Meeting. The costs of
solicitation and expenses incurred in connection with preparing this proxy
statement and its enclosures, including any cost of retaining a proxy
solicitation firm, will be borne by the Funds. The Funds will reimburse
brokerage firms and others for their expenses in forwarding solicitation
materials to the beneficial owners of shares of the Funds.
With respect to each proposal, a majority of the shares of the Fund
entitled to vote, represented in person or by proxy, is required to
constitute a quorum at the Meeting. Under Massachusetts law, abstentions
do not constitute a vote "for" or "against" a matter but will be included
in determining the number of shares outstanding and the number of shares
present for purposes of the proposals described herein. Proposals 2A
through 2C require a vote based on the total votes entitled to be cast, not
the votes actually cast, while Proposals 1 and 3 require a vote based on
the votes actually cast. As a result, abstentions will assist a Fund in
obtaining a quorum and will have no effect on the outcome of Proposals 1
and 3 but will have the effect of a "no" vote for purposes of obtaining the
requisite vote for approval of Proposals 2A through 2C. Broker "non-votes"
(i.e., proxies from brokers or nominees indicating that such persons have
not received instructions from the beneficial owner or other person
entitled to vote shares on a particular matter with respect to which the
brokers or nominees do not have discretionary power) will be treated the
same as abstentions.
In the event a quorum is not present at the Meeting or in the event a
quorum is present at the Meeting but sufficient votes to approve any of the
proposals are not received, the persons named as proxies may propose one or
more adjournments of the Meeting to permit further solicitation of proxies,
provided that such persons determine such an adjournment and additional
solicitation is reasonable and in the interest of shareholders after
consideration of all relevant factors, including the nature of the relevant
proposals, the percentage of votes then cast, the percentage of negative
votes then cast, the nature of the proposed solicitation activities and the
nature of the reasons for such further solicitation. One or more of the
proposals in this proxy statement may be voted on prior to any adjournment
if sufficient votes have been received for a proposal and such vote is
otherwise appropriate. With respect to each Fund, any such adjournment
will require the affirmative vote of a majority of those shares of the Fund
present at the Meeting in person or by proxy.
This proxy statement and the accompanying Notice of Special Meeting of
Shareholders and form of proxy are being mailed on or about August 25, 1995
to shareholders of record on the record date. The Annual Report for the
fiscal year ended May 31, 1995 for each Fund may be obtained without charge
upon written request to the Trust at the address listed above or by calling
toll free 1-800-531-8448.
PROPOSAL 1
ELECTION OF TRUSTEES
The Board of Trustees of the Trust currently consists of eight
Trustees; six were elected by shareholders and two were appointed by the
Board of Trustees in accordance with the provisions of the By-laws of the
Trust. Pursuant to a policy recently adopted by the Board, each duly
elected or appointed Trustee will continue to serve as a Trustee until the
Trustee either reaches age 70 or has served 10 years in such capacity. To
ensure continuity of Board membership during the implementation of this
policy, the Board has determined to permit George E. Brown to serve as a
Trustee until December 31, 1996, and Howard L. Freeman, Jr. to serve as a
Trustee until December 31, 1999. A Trustee of the Trust may resign or be
removed by a vote of the holders of a majority of the outstanding shares of
the Trust at any time.
Under the Investment Company Act of 1940, as amended (the "1940 Act"),
if at any time less than a majority of the Trustees holding office have
been elected by shareholders, the Trustees then in office are required to
call a shareholder meeting for the purpose of electing those Trustees who
have not previously been elected by shareholders. As noted above, two of
the eight Trustees of the Trust, Hansford T. Johnson and Barbara B.
Dreeben, have not been elected by shareholders, and one Trustee, C. Dale
Briscoe, has informed the Board of his intention not to continue to serve
as a Trustee after December 31, 1995. The Trustees believe that by
electing all Trustees at the Meeting, the Trust may delay the time at which
another shareholder meeting is required for the election of Trustees,
thereby saving the expense associated with holding such a meeting.
All of the individuals named below are presently serving as Trustees
of the Trust. The shareholders are being asked to elect these seven
nominees to serve as Trustees until their successors are elected and
qualified. All shares represented by valid proxies will be voted
in the election of Trustees FOR the nominees named below, unless authority
to vote for a particular nominee is withheld. Each nominee has agreed to
serve as a Trustee if elected. If any such nominee is not available for
election at the time of the Meeting, the persons named as proxies will vote
for such substitute nominee as the Board of Trustees may recommend. In the
event any current Trustee is not elected at the Meeting, it is anticipated
that such Trustee will continue to serve until a successor is elected and
qualified.
Nominees for Election as Trustees
The following table sets forth information concerning the nominees for
election as Trustees of the Trust:
Shares of Funds
Deemed Beneficially
Owned on
June 30, 1995
-------------------
Name and Position Trustee Principal Occupation for
with the Trust Since Past 5 Years and Current Fund/Number
----------------- ----- Trusteeships of Shares
------------------------ -----------
*Hansford T. Johnson 1993 Director, Vice Chairman and Deputy [A]2,168.480
Trustee and Chairman Attorney-in-Fact, United Services [B] 826.853
of the Board of Trustees Automobile Association (USAA) [C] 573.394
Age: 59 and President, Chief Executive [D]1,473.658
Officer, Director and Vice Chair- [E] 332.353
man of the Board of Directors of
USAA Capital Corporation and of its
various subsidiaries and affiliates
(9/93-present); Chief of Staff, USAA
(1/93-8/93); Executive Vice President,
USAA (10/92-12/92); Commander-
in-Chief, CINCTRANS, Department
of Defense-Pentagon (9/89-9/92).
Mr. Johnson currently serves as a
Director or Trustee and Chairman of
the Board of three other investment
companies for which the Manager
serves as an investment adviser and
Chairman of the Boards of Directors
of USAA Investment Management
Company, USAA Shareholder
Account Services, USAA Federal
Savings Bank and USAA Real
Estate Company.
*Michael J.C. Roth 1986 Chief Executive Officer None
President, Trustee and (10/93-present) and President,
Vice Chairman of the Director and Vice Chairman
Board of Trustees of the Board of Directors of
Age: 53 USAA Investment Management
Company (1/90-present); Director,
USAA Federal Savings Bank (12/83-
8/91); Director, USAA Life Insurance
Company (1/92-present). Mr. Roth
currently serves as President, Director
or Trustee and Vice Chairman of the
Board of three other investment
companies and as Trustee and Vice Chairman
of the Board of one other investment
company for which the Manager serves as
an investment adviser. He serves as
President, Director, and Vice Chairman
of USAA Shareholder Account Services.
*John W. Saunders, Jr. 1990 Senior Vice President and Director, [B] 141.344
Trustee, Vice President USAA Investment Management Company
and Chairman of the Pricing (10/85-present); Director, BHC Financial,
and Investment Committee Inc. and BHC Securities, Inc. (1/87-
Age: 60 present). Mr. Saunders currently serves
as Director or Trustee and Vice President
of three other investment companies and
as Vice President of one other investment
company for which the Manager serves as
an investment adviser. He serves as Senior
Vice President of USAA Shareholder Account
Services.
George E. Brown 1984 Retired. Mr. Brown currently serves None
Trustee and Chairman as Director or Trustee of three other
of the Corporate investment companies for which the
Governance Committee Manager serves as an investment
Age: 77 adviser.
Howard L. Freeman, Jr. 1984 Assistant General Manager for [B]1,055.423
Trustee and Chairman Finance, San Antonio City Public
of the Audit Committee Service Board (1976-present).
Age: 60 Mr. Freeman currently serves as
Director or Trustee of three other
investment companies for which the
Manager serves as an investment
adviser.
Richard A. Zucker 1992 Vice President, Beldon Roofing [E]2,947.550
Trustee and Remodeling (1985-present).
Age: 52 Mr. Zucker currently serves as
Director or Trustee of three other
investment companies for which the
Manager serves as an investment
adviser.
Barbara B. Dreeben 1994 President, Postal Addvantage None
Trustee (7/92-present); Consultant, Nancy
Age: 50 Harkins Stationer (8/91-present);
Merchandise Manager, Nancy Harkins
Stationer (7/82-8/91). Mrs. Dreeben
currently serves as Director or Trustee
of three other investment companies
for which the Manager serves as an
investment adviser.
Trustees and executive officers of the Trust, individually and as a group,
own 2,168.480 shares of the Balanced Portfolio Fund, 2,451.938 shares of
the Cornerstone Fund, 681.502 shares of the Emerging Markets Fund,
1,762.496 shares of the International Fund and 3,279.903 shares of the
World Growth Fund which is less than one percent of the outstanding shares
of each of these Funds.
------------------------
*Individual who is deemed to be an "interested person" of the Trust under
the 1940 Act because of his affiliation with the Manager.
[A] Balanced Portfolio Fund
[B] Cornerston Fund
[C] Emerging Markets Fund
[D] International Fund
[E] World Growth Fund
Executive Officers
The following table sets forth information concerning the executive
officers of the Trust:
Name and Position Executive Principal
with the Trust Officer Since Occupation for Past 5 Years
---------------- ------------- ---------------------------
Michael J.C. Roth 1985 See preceding table.
President and Vice
Chairman of the Board
of Trustees
John W. Saunders, Jr. 1984 See preceding table.
Vice President
Michael D. Wagner 1984 Vice President, Corporate Counsel USAA
Secretary (1982-present). Mr. Wagner has held
Age: 47 various positions in the legal depart-
ment of USAA since 1970 and currently
serves as Vice President, Secretary and
Counsel for USAA Investment Management
Company and USAA Shareholder Account
Services. Mr. Wagner currently serves
as Secretary of three other investment
companies for which the Manager serves
as an investment adviser, and as Vice
President, Corporate Counsel for
various other USAA subsidiaries and
affiliates.
Sherron Kirk 1992 Vice President, Controller, USAA
Treasurer Investment Management Company (10/92-
Age: 50 present); Vice President, Corporate
Financial Analysis, USAA (9/92-10/92);
Assistant Vice President, Financial
Plans and Support, USAA (8/91-9/92);
Assistant Vice President, Real Estate
Accounting, USAA Real Estate Company
(5/90-7/91). Ms. Kirk currently serves
as Treasurer of three other investment
companies for which the Manager serves
as an investment adviser and as Vice
President, Controller of USAA
Shareholder Account Services.
Board Meetings and Committees
The Board of Trustees has four committees: an Executive Committee, an
Audit Committee, a Pricing and Investment Committee and a Corporate
Governance Committee. Between the meetings of the Board of Trustees and
while the Board is not in session, the Executive Committee may exercise all
of the powers of the Board of Trustees in the management of the business of
the Trust which may be delegated to it by the Board. The Executive
Committee consists of four Trustees, currently Messrs. Johnson, Roth,
Saunders and Freeman.
The Audit Committee consists of four Trustees, currently Messrs.
Brown, Freeman and Zucker and Mrs. Dreeben, none of whom is an "interested
person" of the Trust. The Audit Committee (a) selects an external auditor;
(b) reviews and approves an annual audit plan; (c) reviews annual financial
statements; (d) reviews the reports of the auditors; and (e) undertakes
such studies and analyses of various matters as shall from time to time be
deemed necessary by the Board of Trustees, and makes appropriate
recommendations to the Board of Trustees on such matters.
The Pricing and Investment Committee consists of four Trustees,
currently Messrs. Saunders, Brown, Briscoe and Zucker. The Pricing and
Investment Committee (a) acts upon and deals with certain questions,
issues, and matters which may arise under Rule 2a-7 and the "Procedures to
Stabilize Net Asset Value" adopted by the Trust as it impacts money market
funds; and (b) considers and acts upon such investment issues and matters
as may be presented relevant to the Funds.
The Corporate Governance Committee consists of all the Trustees who
are not "interested persons" of the Trust. Its purpose is to maintain
oversight of the organization and performance of the Board of Trustees; to
evaluate the effectiveness of the Board and to ensure that the Board
conducts itself ethically and in accordance with applicable laws; to
maintain a policy on Board tenure and term limitations for independent
Trustees; to recommend candidates to fill vacancies for independent
trusteeship positions of the Board; and to consider and act upon such other
issues as may be presented to it by the Board.
During the fiscal year ended May 31, 1995, the Board of Trustees met
six times, the Executive Committee met twice, the Audit Committee met three
times, the Pricing and Investment Committee met six times and the Corporate
Governance Committee met once since its creation in May 1995. Each Trustee
attended 75% or more of the total number of meetings of the Board and any
committee on which he or she served.
Compensation of Trustees and Executive Officers
The executive officers and "interested" Trustees of the Trust, as
defined in Section 2(a)(19) of the 1940 Act, receive no direct compensation
from the Trust. Such executive officers and "interested" Trustees of the
Trust receive compensation from USAA or the Manager. Trustees and
committee members who are not "interested persons" are compensated on the
basis of an annual retainer of $3,500 for the Trust. The fee for attending
a regular or special Board Meeting is $500. All Funds in the USAA Family
of Funds meet on a combined basis for regular meetings and the meeting fee
is allocated evenly among the total number of Funds represented at the
meeting. An annual retainer of $500 from the Trust for serving on one or
more committees is paid plus reimbursement for reasonable expenses incurred
in attending any Board or committee meetings. Beginning in September of 1995,
all compensation paid to the Trustees will be used to acquire shares of one
or more USAA Funds within the USAA Family of Funds under an automatic invest-
ment program for Trustees. The following table sets forth information
concerning the compensation of the Trustees of the Trust for the fiscal year
ended May 31, 1995.
Total
Name Aggregate Compensation from
of Compensation from the USAA Family
Trustee the Trust of Funds (c)
------- ----------------- -----------------
George E. Brown (a) $4,660 $18,500
Barbara B. Dreeben 4,660 18,500
Howard L. Freeman, Jr. 4,660 18,500
Hansford T. Johnson None (b) None (b)
Michael J.C. Roth None (b) None (b)
John W. Saunders, Jr. None (b) None (b)
Richard A. Zucker 4,660 18,500
_________________
(a) The USAA Family of Funds has accrued deferred compensation for Mr.
Brown in an amount (plus earnings thereon) of $20,395. The
compensation was deferred by Mr. Brown pursuant to a non-qualified
Deferred Compensation Plan, under which deferred amounts accumulate
interest quarterly based on the annualized U. S. Treasury Bill rate in
effect on the last day of the quarter. Amounts deferred and
accumulated earnings thereon are not funded and are general unsecured
liabilities of the USAA Funds until paid. The Deferred Compensation
Plan was terminated in 1988, and no compensation has been deferred by
any Trustee/Director of the USAA Family of Funds since the Plan was
terminated.
(b) Hansford T. Johnson, Michael J.C. Roth, and John W. Saunders, Jr. are
affiliated with the Trust's investment adviser and, accordingly,
receive no remuneration from the Trust or any other Fund of the USAA
Family of Funds.
(c) At May 31, 1995, the USAA Family of Funds consisted of 4 registered
investment companies offering 29 individual funds. Each Trustee
presently serves as Trustee or Director of each investment company in
the USAA Family of Funds. In addition, Michael J. C. Roth presently
serves as Trustee of USAA Life Investment Trust, a registered
investment company advised by USAA Investment Management Company,
consisting of five funds offered to investors in a fixed and variable
annuity contract with USAA Life Insurance Company. Mr. Roth receives
no compensation as Trustee of USAA Life Investment Trust.
Share Ownership of Management and Certain Beneficial Owners
As of June 30, 1995, USAA, a reciprocal interinsurance exchange,
beneficially owned directly or indirectly through one or more of its
affiliates 13,751 shares (.1%) of the Balanced Portfolio Fund; 500,010
shares (20.6%) of the Emerging Markets Fund; 5,938,052 shares (27.5%) of
the International Fund; 730,363 shares (4.7%) of the World Growth Fund; and
344,267 shares (1.3%) of the GNMA Trust. The address of USAA and its
affiliates is 9800 Fredericksburg Road, San Antonio, Texas 78288.
The following table identifies all other persons, who as of June 30,
1995, held of record or owned beneficially 5% or more of any of the Funds'
shares.
Name and Address of
Title of Class Beneficial Owner Percent of Class
Treasury Money Lana Dena Corporation 7.3%
Market Trust 5088 Granada Ct
Alta Loma, CA 91737
Required Vote
Those nominees for Trustee of the Trust receiving the vote of a
plurality of the votes cast at a meeting at which a quorum is present shall
be elected. Shares of all Funds shall be voted as a single class for the
election of Trustees.
PROPOSAL 2
PROPOSALS TO AMEND
CERTAIN INVESTMENT RESTRICTIONS
(Balanced Portfolio Fund, Cornerstone Fund, Gold Fund, International Fund,
World Growth Fund, GNMA Trust and Treasury Money Market Trust Only)
The Board of Trustees has proposed that shareholders approve the
amendment of certain fundamental investment restrictions of the Balanced
Portfolio Fund, Cornerstone Fund, Gold Fund, International Fund, World
Growth Fund, GNMA Trust and Treasury Money Market Trust. The proposed
changes to the investment restrictions of each Fund are based on
recommendations prepared by the Manager, which were reviewed and approved
by the Board of Trustees, subject to shareholder approval, at a meeting of
the Board held on July 12, 1995. Shareholders of the Emerging Markets Fund
are not being asked to vote on Proposal 2 because such Fund's investment
restrictions are substantially the same as the proposed investment
restrictions.
Under the 1940 Act, all investment policies of a mutual fund must be
classified as either "fundamental" or "non-fundamental." A fundamental
policy may not be changed without the approval of the fund's shareholders;
a non-fundamental policy may be changed by the Trustees without shareholder
approval. Under the 1940 Act only certain policies are required to be
classified as fundamental.
In the past, the Trust has adopted certain fundamental investment
restrictions for each Fund to reflect regulatory, business or industry
conditions, which in some cases are no longer in effect. At the Manager's
request, the Board of Trustees of the Trust recently reviewed each Fund's
fundamental investment restrictions and determined that it would be in the
best interest of each Fund to clarify and modernize certain restrictions
which are required to be fundamental. The Trustees also analyzed the
various fundamental and non-fundamental investment restrictions of all of
the investment companies advised by the Manager, and where practical and
appropriate to a Fund's investment objective, proposed to standardize
investment restrictions. The proposed investment restrictions set forth
below are expected to become standard for each of the mutual funds
comprising the USAA Family of Funds.
The Trustees believe that the ability of the Funds' investment adviser
to manage the Funds' portfolios in a changing regulatory or investment
environment will be enhanced by approval of these proposals. In addition,
the Trustees believe that approval of these proposals will reduce the need
for future shareholder meetings, thereby reducing the Funds' ongoing costs
of operation. Furthermore, it is anticipated that increased
standardization will help to promote operational efficiencies and
facilitate monitoring of compliance with fundamental and non-fundamental
investment restrictions.
At the Meeting, shareholders of each Fund will vote upon each of the
proposals separately. Each change to a Fund's fundamental investment
restrictions will become effective as soon as practicable following
approval by shareholders but in no event prior to November 1, 1995.
Although the proposed changes to each Fund's investment restrictions
generally give broader authority to make certain investments or engage in
certain practices than do the current investment restrictions of the Funds,
the Manager does not currently intend to change in any material way the
investment strategy or operations of any Fund.
Required Vote
To be approved with respect to any Fund, a proposal must receive the
affirmative vote of "a majority of the outstanding voting securities" of
the Fund, as defined in the 1940 Act. Under the 1940 Act, a vote of a
majority of the outstanding voting securities of a Fund means the lesser of
(a) more than 50% of the outstanding shares of the Fund or (b) 67% or more
of the shares of the Fund represented at the Meeting if more than 50% of
the outstanding shares of the Fund are present at the Meeting or
represented by proxy.
The Board of Trustees unanimously recommends that shareholders vote
FOR approval of each of the following proposals.
PROPOSAL 2A
Under the current investment restriction relating to issuer
diversification of the Balanced Portfolio Fund, Cornerstone Fund, Gold
Fund, International Fund, World Growth Fund, GNMA Trust and Treasury Money
Market Trust, a Fund may not "purchase securities of any one issuer
(except the United States Government, its agencies and instrumentalities),
if as a result of such purchase more than 5% of the market value of the
total assets of that [Fund] would be invested in securities of such
issuer." In addition, a Fund may not "purchase more than 10% of any class
of securities or of the outstanding voting securities of any issuer." Both
restrictions currently apply to 100% of the assets of a Fund. The current
restrictions are more restrictive than the 1940 Act, which applies the 5%
and 10% diversification requirements to only 75% of a Fund's total assets.
The current investment restrictions were adopted to comply with certain
state securities requirements that are no longer applicable.
The Trustees propose to amend these investment restrictions to apply
to only 75% of a Fund's total assets and to clarify that the exception for
government securities is to be construed in accordance with the 1940 Act.
The proposed amendment would permit a Fund to invest up to 25% of its total
assets in the securities of a single issuer. The modified restriction would
mirror the diversification provision of the 1940 Act, and as such, the Manager
believes this restriction would be consistent with the diversification
restrictions adopted by the vast majority of other diversified mutual funds.
The Trustees believe that such a change will benefit the Fund by allowing the
Manager greater investment flexibility. To the extent that a Fund invests more
than 5% of its assets in the securities of any single issuer, the Fund will be
subject to greater risks associated with those securities. Conversely,
the Fund will be able to realize greater benefits should the value of such
securities appreciate.
If Proposal 2A is approved, the Trustees intend to delete the existing
investment restrictions concerning issuer diversification and adopt the
following new fundamental investment restriction:
[A Fund may not] with respect to 75% of its total
assets, purchase the securities of any issuer (except
U.S. Government Securities, as such term is defined in
the 1940 Act) if, as a result, the Fund would own more
than 10% of the outstanding voting securities of such
issuer or the Fund would have more than 5% of the value
of its total assets invested in the securities of such
issuer.
PROPOSAL 2B
Under the current investment restrictions relating to borrowing of the
Balanced Portfolio Fund, Cornerstone Fund, Gold Fund, International Fund
and World Growth Fund, each of these Funds may not "borrow money, except
from banks for temporary or emergency purposes and then only in an
aggregate amount not in excess of 5% of the market value of its total
assets at the time of such borrowing." Under the current investment
restrictions relating to borrowing of the GNMA Trust and Treasury Money
Market Trust, each of these Funds may not "borrow money, except from banks
for temporary purposes and then only in an aggregate amount not in excess
of 5% of the market value of its total assets at the time of such
borrowing."
It is proposed that the above investment restrictions be amended to
permit a Fund to borrow an amount equal to not more than 1/3 of its total
assets for temporary or emergency purposes. It is also proposed that a
Fund be permitted to borrow from non-banks, to the extent permitted by
applicable law. Presently, a Fund may borrow for temporary purposes
up to five percent of the value of its total assets from any one non-bank.
The proposed amendment is consistent with current limitations imposed under
the 1940 Act. The Trustees believe that these changes will provide the
Manager with greater flexibility in managing the liquidity needs of a Fund
by allowing the Fund to use borrowings to satisfy redemptions or settle
securities transactions. Consistent with current policies, a Fund would
not be permitted to borrow for the purpose of leveraging its portfolio.
Borrowing money temporarily will cause a Fund to incur interest charges,
and may increase the effect of fluctuations in the value of a Fund's
investments as long as the borrowing is outstanding. The Manager will
take these factors into account when evaluating the relative merits of
different ways of raising cash temporarily.
If Proposal 2B is approved, the Trustees will delete the existing
investment restrictions relating to borrowing and adopt the following new
fundamental investment restriction:
[A Fund may not] borrow money, except for temporary or
emergency purposes in an amount not exceeding 33 1/3%
of its total assets (including the amount borrowed)
less liabilities (other than borrowings).
In addition to the above restriction, the Trustees will adopt
the following non-fundamental restriction:
[A Fund may not] purchase any security while borrowings
representing more than 5% of the Fund's total assets
are outstanding.
PROPOSAL 2C
Under the current investment restriction relating to lending of the
Balanced Portfolio Fund, Cornerstone Fund, Gold Fund, International Fund,
World Growth Fund, GNMA Trust and Treasury Money Market Trust, a Fund may
not "make loans to other persons, except that it may purchase or hold
publicly held debt securities and may purchase or hold repurchase
agreements in accordance with its investment policies."
It is proposed that the above investment restriction be amended to
permit a Fund to lend up to 1/3 of its total assets. The proposed
amendment to this limitation is consistent with current limitations imposed
under the 1940 Act and state securities laws.
It is a common practice in the mutual fund industry for mutual funds
to lend portfolio securities to obtain additional fee income on idle
assets. While such loans are outstanding, the mutual fund receives as
collateral cash or high quality short-term instruments with a value at
least equal to the amount of the loan. The collateral is marked-to-market
daily and is available at all times to satisfy the borrower's obligations.
In this manner, the risks associated with a borrower default are minimized.
Currently, none of the Funds engage in securities lending activities and
the Board of Trustees has no current intention of doing so. By approving
the proposed changes to each of the Fund's investment restrictions at this
time, the Funds will be able to enter into securities loan transactions at
a future date.
If Proposal 2C is approved, the Trustees will delete the existing
investment restriction relating to lending and adopt the following new
fundamental investment restriction:
[A Fund may not] lend any securities or make any loan
if, as a result, more than 33 1/3% of its total assets
would be lent to other parties, except that this
limitation does not apply to purchases of debt
securities or to repurchase agreements.
PROPOSAL 3
RATIFICATION OF SELECTION OF AUDITORS
The Board of Trustees has selected the firm of KPMG Peat Marwick LLP
as auditors for the Trust for its fiscal year ending May 31, 1996.
Shareholders are being asked to ratify the selection of KPMG Peat Marwick
LLP to perform audit services for the Trust for the current fiscal year.
KPMG Peat Marwick LLP were the auditors for the Trust for the fiscal year
ended May 31, 1995.
KPMG Peat Marwick LLP are the auditors for the Manager, the other
investment companies for which the Manager serves as investment adviser,
USAA and its subsidiaries and affiliated companies. A representative of
KPMG Peat Marwick LLP is expected to attend the Meeting with the
opportunity to make a statement and/or respond to appropriate questions
from shareholders.
Required Vote
Proposal 3 requires the affirmative vote of a majority of the votes
cast at a meeting at which a quorum is present. Shares of all Funds shall
be voted as a single class. The Board of Trustees unanimously recommends
that shareholders vote FOR Proposal 3.
OTHER BUSINESS
The Board of Trustees does not know of any other matters to be
considered at the Meeting other than those referred to above. If any other
matters are properly presented to the Meeting, it is the intention of proxy
holders to vote such proxies on such matters in accordance with their
judgment.
The Funds do not hold annual shareholder meetings. Shareholders
wishing to submit proposals for inclusion in a proxy statement for a
subsequent shareholder meeting should send their written proposals to the
Secretary of the Trust, 9800 Fredericksburg Road, San Antonio, Texas
78288.
By Order of the Board of Trustees
Michael D. Wagner
Secretary
August 23, 1995
San Antonio, Texas
BALANCED PORTFOLIO FUND USAA INVESTMENT TRUST
INTERNATIONAL FUND Special Meeting of Shareholders - October 13, 1995
CORNERSTONE FUND THIS PROXY IS SOLICITED ON
WORLD GROWTH FUND BEHALF OF THE BOARD OF TRUSTEES
GOLD FUND The shareholder(s) as shown on
TREASURY MONEY MARKET FUND this card hereby appoints Michael
GNMA TRUST J.C. Roth, John W.Saunders, Jr. and
George E. Brown, and each of them,
as proxies with full power of
substitution to act for and vote on
PROXY SERVICES behalf of the shareholder(s) all
POST OFFICE BOX 9149 shares of the Fund which the
FARMINGDALE, NY 11735-9856 shareholder(s) would be
entitled to vote if personally
present at the Special Meeting
of Shareholders of USAA
INVESTMENT TRUST (the "Trust")
to be held in San Antonio,
Texas on October 13, 1995 or at
any adjournment thereof, on the
following items as set forth in
the Notice of Meeting and the
Proxy Statement.
PLEASE INDICATE YOUR VOTES BY
AN "X" IN THE APPROPRIATE BOXES
BELOW
IF A CHOICE IS SPECIFIED, THIS
PROXY WILL BE VOTED AS
INDICATED. IF NO CHOICE IS
SPECIFIED, THIS PROXY WILL BE
VOTED "FOR" ALL PROPOSALS. In
their discretion, the Proxies
are authorized to vote upon
such other business as may
properly come before the
meeting. The Board of Trustees
recommends a vote FOR such
proposals:
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS [X]
KEEP THIS PORTION FOR YOUR RECORDS.
________________________________________________________________________
DETACH AND RETURN THIS PORTION ONLY.
With- For 1. Election of Trustees: 1) H. Johnson, 2) M. Roth,
For hold All 3) J. Saunders, Jr., 4) G. Brown, 5) B. Dreeben,
All All Except 6) H. Freeman, Jr., 7) R. Zucker
[ ] [ ] [ ] To withhold authority to vote for any individual
nominee(s), write that nominee(s) number on the
line provided below.
-------------------------------------------------
For Against Abstain
[ ] [ ] [ ] 2A. Proposal to amend each Fund's investment
restriction relating to diversification.
[ ] [ ] [ ] 2B. Proposal to amend each Fund's investment
restriction relating to borrowing.
[ ] [ ] [ ] 2C. Proposal to amend each Fund's investment
restriction relating to lending.
[ ] [ ] [ ] 3. Proposal to ratify the selection of KPMG Peat
Marwick LLP as auditors for the Trust.
IMPORTANT! Please Vote, Sign, Date, Detach and Mail in the Enclosed
Envelope.
The undersigned acknowledges receipt of the Notice of Special Meeting
and Proxy Statement dated August 23, 1995. This proxy may be revoked at
any time prior to the exercise of the powers conferred by this proxy, as
indicated in the Proxy Statement.
______________________________________________________________________
Signature Date Signature Date
Please sign name or names exactly as printed above to authorize the
voting of your shares as indicated above. Where shares are registered
with joint owners, all joint owners should sign. Persons signing as
executors, administrators, trustees, etc., should so indicate.
Corporate proxies should be signed by authorized officer.
PROXY SERVICES USAA INVESTMENT TRUST
POST OFFICE BOX 9149 EMERGING MARKETS FUND
FARMINGDALE, NY 11735-9856 Special Meeting of Shareholders - October 13, 1995
THIS PROXY IS SOLICITED ON
BEHALF OF THE BOARD OF TRUSTEES
The shareholder(s) as
shown on this card hereby
appoints Michael J.C. Roth,
John W. Saunders, Jr. and George
E. Brown, and each of
them, as proxies with full
power of substitution to
act for and vote on behalf
of the shareholder(s) all
shares of the Fund which
the shareholder(s) would
be entitled to vote if
personally present at the
Special Meeting of
Shareholders of USAA
INVESTMENT TRUST (the
"Trust") to be held in San
Antonio, Texas on October
13, 1995 or at any
adjournment thereof, on
the following items as set
forth in the Notice of
Meeting and the Proxy Statement.
PLEASE INDICATE YOUR VOTES BY
AN "X" IN THE APPROPRIATE BOXES
BELOW
IF A CHOICE IS SPECIFIED, THIS
PROXY WILL BE VOTED AS
INDICATED. IF NO CHOICE IS
SPECIFIED, THIS PROXY WILL BE
VOTED "FOR" ALL PROPOSALS. In
their discretion, the Proxies
are authorized to vote upon
such other business as may
properly come before the
meeting. The Board of Trustees
recommends a vote FOR such
proposals:
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS [X]
KEEP THIS PORTION FOR YOUR RECORDS.
___________________________________________________________________
DETACH AND RETURN THIS PORTION ONLY.
With- For 1. Election of Trustees: 1) H. Johnson, 2) M. Roth,
For hold All 3) J. Saunders, Jr., 4) G. Brown, 5) B. Dreeben,
All All Except 6) H. Freeman, Jr., 7) R. Zucker
[ ] [ ] [ ] To withhold authority to vote for any individual
nominee(s), write that nominee(s) number on the
line provided below.
--------------------------------------------------
2. Not Applicable.
For Against Abstain
[ ] [ ] [ ] 3. Proposal to ratify the selection of KPMG Peat
Marwick LLP as auditors for the Trust.
IMPORTANT! Please Vote, Sign, Date, Detach and Mail in the Enclosed
Envelope.
The undersigned acknowledges receipt of the Notice of Special Meeting
and Proxy Statement dated August 23, 1995. This proxy may be revoked at
any time prior to the exercise of the powers conferred by this proxy, as
indicated in the Proxy Statement.
________________________________________________________________________
Signature Date Signature Date
Please sign name or names exactly as printed above to authorize the
voting of your shares as indicated above. Where shares are registered
with joint owners, all joint owners should sign. Persons signing as
executors, administrators, trustees, etc., should so indicate.
Corporate proxies should be signed by authorized officer.
